IHL Board approves public private partnership for new Ole Miss student housing

• The new facility will house more than 1,200 students and is expected to be completed by summer 2027.

A new student residential faculty will be built on the campus of the University of Mississippi that will be managed and operated in partnership with Ole Miss and an outside company as part of a public private partnership project. 

The project received the approval of the Board of Trustees for the Mississippi Institutions of Higher Learning during a special called meeting held Wednesday afternoon.

When complete, the facility will provide an additional 1,250 beds for student housing at the Kincannon Hall site on the Oxford campus. Demolition of that site began roughly two years ago. Prior to its demolition, Kincannon Hall sat vacant for about 8 years. 

The contract includes a ground lease between Ole Miss and PRG–Oxford Properties LLC for 45 years. The building will be owned by PRG and operated under a partnership between the university and PRG.

Construction of the $88 million building will be conducted by Greystar and is expected to be funded by “primarily” tax-exempt bonds, said Associate Commissioner of Finance John Pearce. Total cost of the project is expected to be $118 million when interest is calculated in.

Costs to operate and maintain the facility when complete will be covered through rent paid by students. A portion of those funds will also be used to retire the debt and establish a reserve account for repairs and maintenance, with overflows going to the university.

“The university will receive lease payments from surplus cash flow from the operation of the facility, after operating costs, debt service, management fees, a maintenance reserve and other subordinated expenses are taken into account,” Pearce explained to the IHL Board. 

The Board also approved a management agreement for the same building between PRG and Ole Miss. 

“UM will provide administrative and operating services, including marketing, leasing, billing collection, residential life programming, IT, security and day-to-day management,” Pearce described. “While PRG will be responsible for maintenance repairs and asset management.” 

Under the agreement, PRG will be able to set rates charged to students for rent and garbage collection without consulting the IHL Board. To allay concerns within the Board about unfair pricing, Pearce explained how Ole Miss has an option to address such practices should they occur. 

First, the university will not be responsible for paying off debts associated with construction of the facility. As such, Pearce said PRG will need the autonomy to set rates consistent with the market, which will include other residential facilities either owned by the university or others within the Oxford area. Competition in the market is expected to lead the company to set fair rates that ensure maximum occupancy. Additionally, the university will be under no mandates to market the property to students. 

While the university will not be paying for the construction of the facility, there is an avenue for Ole Miss to obtain ownership of the building should certain aspects of the contract not play out favorably for the university. 

“The agreement can be terminated by the university, purchasing the facility for the amount necessary to defease outstanding bonds after an estimated 7 years after the execution of the ground lease,” Pearce explained. “Furthermore, UM has the right to purchase the facility and terminate the ground lease after 5 years of operation by defeasing the outstanding bonds.”

Completion of the facility is expected by July 31, 2027. To ensure the facility is complete and operational in a timely manner, PRG will be responsible for housing, transporting, and possibly feeding students who would have been housed in the proposed facility if it is not completed on time. 

Even if the contract goes to its full term, the university will assume ownership of the building at the end of the 45-year agreement. 

Construction of the facility will utilize new technologies that aim to reduce repairs and extend the lifespan, Associate Commissioner for Real Estate Brad Rowland said. To prevent fires, cold form metal studs and modular construction methods that offer increased durability and strength will be employed in the construction process. 

The building will also be constructed to meet all current Ole Miss interior and exterior facility standards.

“The exterior of the buildings will be (constructed) with the university’s standard masonry and roofing materials while maintaining the campus esthetic and quality expected,” Rowland added. “The standard interior and exterior materials are purposely selected to maximize durability and minimize deferred maintenance both inside and outside of the facility.”